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Award Letter - An official
document, issued by the financial aid office,
that lists all the financial aid awarded to the student. This letter
generally provides the expected family contribution, cost of
attendance and the terms of the aid awarded.
Capitalization - The process of
adding unpaid interest to the principal balance of an educational
loan, increasing the size of the loan that must be repaid.
College Foundation, Inc. (CFI) -
A nonprofit organization created by the State of North Carolina in
1955. CFI's sole purpose is to assist North Carolina students
in paying their education expenses beyond high school. On
behalf of the Authority, CFI administers a number of grant programs
and is the central loan originator and servicer for the North
Carolina Federal Family Loan Program.
Consolidation - A loan program
that allows a borrower to combine several educational loans into one
new loan. This process extends the repayment period and allows for a
single monthly payment. This simplifies the repayment process
and sometimes results in a lower interest rate.
Cost of Attendance (COA) - The
total cost of an education - usually expressed as a yearly figure.
COA includes tuition and fees, room and board, an allowance for
books and supplies, transportation, and miscellaneous expenses and
is determined by the financial aid office of the institution.
Default - Failure to repay a
student loan according to the terms of a promissory note signed by
the student. The organization that holds the loan (the state or the
federal government) can take action to recover the money, including
notifying national credit bureaus of the default. Wages and/or
tax returns of the defaulter may be garnished, and the borrower will
no longer be eligible to receive federal financial aid until the
defaulted loan is repaid or the borrower has made six consecutive
monthly payments.
Deferment - This is an
authorized period of time during which a borrower may postpone
principal and interest payments. Deferments are available to
borrowers who are in school at least half time, enrolled in a
graduate fellowship program, during periods of unemployment or
economic hardship, and in some cases, for teaching in shortage areas
or low income schools or for volunteering with the Peace Corps, or
VISTA, etc.
Dependent Student - For
financial aid purposes, an undergraduate student is usually
classified as a dependent and is expected to have access to parental
financial resources if he/she is not married, does not have legal
dependents, is not a veteran, and is not an orphan or ward of the
court.
Entrance/Exit
Interviews - Counseling sessions for borrowers are required before
their first loan disbursement can be released and before the
borrower leaves school.
Expected Family Contribution
(EFC) - Determined by a formula, this figure indicates how much of a
family's financial resources should be available to help pay for the
student's education. The EFC is used in determining eligibility for
financial aid. Both FM (federal methodology) and IM
(institutional methodology) use the EFC concept, although the
calculated EFC under the two methodologies may differ.
FAFSA (Free Application for
Federal Student Aid) - This is the federal aid application that must
be completed by students who want to be considered for federal
need-based financial aid.
FDSLP (Federal Direct Student
Loan Program) - Under this program education loans are made
available directly from the U.S. government. Participating
schools serve as agents for subsidized and unsubsidized Stafford
Loans and Parent PLUS loans.
FFELP (Federal Family Education
Loan Program) - Education loans made by private lenders and
guaranteed by the state designated guaranty agencies on behalf of
the federal government. The North Carolina State Education
Assistance Authority is the guarantor under the North Carolina
FFELP. Subsidized and Unsubsidized Federal Stafford Loans and
Parent PLUS loans are included in this program.
Financial Aid Package - The
total financial aid a student receives to meet educational expenses
is called the "financial aid package." It may include federal,
state and private aid such as grants, loans, work-study, and
scholarships.
Financial Need - This is the
difference between the Cost of Attendance and the Estimated Family
Contribution and is used in determining what the student's aid
package will be.
Forbearance - When the lender
agrees to temporarily postpone a borrower's principal repayment
obligation for a period of time, this is called "Forbearance."
Interest continues to accrue on the loan during the forbearance
period.
Full-Time Student - For
undergraduate students, this is usually a minimum of 12 semester
hours of enrollment in a degree-granting program.
FM (Federal methodology) - This
is an eligibility formula, mandated by the US Congress, that
determines the student's and the family's "expected family
contribution" (EFC). This formula is used in making allocations of
federal aid and, at some colleges and universities, for making
institutional aid decisions as well.
General Education Development
(GED) - Certificate - This is a certificate students receive if
they've passed a specific, approved high school equivalency test.
Students who don't have a high school diploma but who have a GED may
still qualify for federal and state student aid.
Grace Period - Period of time
when a borrower leaves school or drops below half-time and the
borrower is not obligated to begin repayment of his/her loans -
usually six or nine months.
Grant - Financial aid awarded on
the basis of need or merit that the student is not obligated to
repay.
Guaranty Agency - The state
designated organization that administers the Federal Stafford Loan
and Federal PLUS Loan programs (the State Education Assistance
Authority in North Carolina).
IM
(institutional methodology) - This need-analysis formula was
developed by College Board's College Scholarship Service. It
determines the student's and the family's capacity to pay for
college each year and is used by some postsecondary institutions for
awarding institutional and private financial aid.
Independent Student - For
financial aid purposes, a student is classified as an independent
student if at least one of the following applies: he/she is 24 years
old or older, is married, is enrolled in a graduate or professional
educational program (beyond a bachelor's degree), has legal
dependents other than a spouse, is an orphan or ward of the court
(or was a ward of the court until age 18), or is a veteran of the US
Armed Forces ("veteran" includes a student who attended a US
military academy who was released under a condition other than
dishonorable).
Insurance
Premium - An amount of up to 1% of the principal amount of the loan
that may be charged by the agency that guarantees the loan (guaranty
agency).
Interest
- The amount of money charged to borrowers for use of loan proceeds.
Interest on education loans is simple interest calculated on the
daily unpaid principal balance. The interest rate may be constant
throughout the life of the loan (fixed rate) or it may change at
specified times (variable rate) as specified by the terms of the
loan.
Monthly
Payments - A minimum monthly payment of $50 is required for
Stafford, PLUS, and EXTRA Loans under a standard repayment schedule.
Months
to Repay - For EXTRA Loans: If the total amount borrowed is less
than $7500, the maximum is 120 months; if the total amount is $7500
- $9,999.99, the maximum is 144 months; if the total amount is
$10,000 - $19,999.99, the maximum is 180 months; if the total amount
is $20,000 - $39,999.99, the maximum is 240 months; if the total
amount is $40,000 - $59,999.99, the maximum is 300 months; if the
total amount is equal to or greater than $60,000, the maximum is 360
months. For PLUS and Stafford Loans: If the total amount to be
borrowed is less than or equal to $30,000, the maximum is 120
months; if the total amount to be borrowed is greater than $30,000,
the maximum is 300 months.
Needs Analysis -
This is the process of reviewing a student's aid application to
determine the ability of the family to contribute to the costs of
education. Completing a needs analysis form (e.g., FAFSA or PROFILE)
is the required step in applying for most types of financial aid.
North Carolina State Education
Assistance Authority (NCSEAA) - The state agency in North Carolina
that insures federal student loans and is authorized by the North
Carolina General Assembly to administer over 30 postsecondary
financial aid programs funded by federal, state, and private sources
(including the FFELP program). NCSEAA is involved in outreach
projects, providing opportunities for North Carolina school
counselors so that they can better assist students and their
families in planning for college. NCSEAA has implemented a new
long-term parental savings trust fund to assist North Carolina
families in paying for their children's education (see North Carolina's College Savings
Program). NCSEAA also maintains an aggressive student loan
collection system for recovery of defaulted and matured student loan
obligations.
Origination
Fee - This is a fee charged by the federal government and deducted
from the loan before disbursement to offset part of the
administrative costs of the Federal Family Education Loan Program
(FFELP).
Principal - The initial amount
of the student loan. Interest is charged on this amount, and
guaranty and origination fees are deducted prior to disbursement.
PROFILE - A need-analysis form
required by some institutions for non-federal aid and processed
through the College Scholarship Service (CSS).
Promissory Note - A borrower
must sign a legal document when he/she receives an educational loan
that lists conditions under which the money is borrowed and the
terms under which he/she agrees to repay the loan with interest. The
borrower's promissory note is usually returned to him/her when the
loan is repaid in full.
Residency - In
North Carolina, a person does not necessarily have to be a US
citizen in order to be classified as a North Carolina resident for
tuition purposes. However, a person must reside in this state for at
least 12 months prior to the date of enrollment or re-enrollment in
a postsecondary institution. Each postsecondary institution
makes its own determination regarding in-state residency. Some
factors used in determining domiciliary intent are place of abode,
place where one votes, place of jury service, car registration or
license, driver's license, place of employment, state where income
tax is paid, location of personal property, and where one spends
vacation time. Minors residing in North Carolina are considered
residents of the state where their parents reside. A North
Carolina resident who leaves the state is granted a 12-month grace
period during which time he/she is treated as an in-state resident
for tuition purposes. State law also allows military and their
dependents to be treated as North Carolina residents for tuition
purposes while stationed in North Carolina.
Satisfactory Academic Progress
(SAP) - A student must be making satisfactory academic progress in
order to continue receiving federal aid. Each institution
develops its own satisfactory academic progress standards for
financial aid eligibility.
Scholarship - A form of
financial aid given to students on the basis of need or merit (or a
combination of both) to help pay for their education expenses. Some
scholarships have community service requirements and geographic,
institutional or academic major restrictions. Most scholarships
require the student to maintain satisfactory academic progress for
renewal.
Scholarship/Loan - A form of
financial aid that has a service and/or cash repayment obligation as
a condition for receiving the funds. A student must promise to repay
the money upon graduation or withdrawal from the program within a
specified time period either through service in a certain
geographical and/or subject area or in cash at a predetermined
interest rate.
Selective Service Registration -
A male student must register with the Selective Service to receive
federal and/or state student aid. The requirement applies to males
who were born on or after January 1, 1960, are at least 18 years
old, are citizens or eligible non-citizens, and are not currently on
active duty in the armed forces.
Student Aid Report (SAR) - After
the student submits the FAFSA to the federal processor, this form is
returned to the student. The SAR reports the information that was
processed and indicates federal eligibility. It may also be used by
the institutional financial aid office in determining a student's
eligibility for other state or private programs of financial
assistance.
Subsidized Loan - This is a
need-based loan on which the interest is paid by the federal
government while the borrower is enrolled in school or during grace
and deferment periods.
Unsubsidized Loan - This is a
non need-based loan for which borrowers are responsible for interest
from the date the loan is disbursed.
Verification - This is a review
process to determine the accuracy of the information on a student's
financial aid application. If a student is selected for
verification, he/she is required to submit documentation (such as
federal tax returns) to support information on his/her federal aid
application.
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